GSA chief resigns amid reports of excessive spending

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Secretary of Homeland Security Janet A. Napolitano, left, listens as General Services Administration Administrator Martha N. Johnson speaks during a news conference to discuss the “If You See Something, Say Something” campaign at the Ronald Reagan Building and International Trade Center on Dec. 8, 2010, in Washington. (Brendan Smialowski/Getty)

The chief of the General Services Administration resigned, two of her top deputies were fired and four managers were placed on leave Monday amid reports of lavish spending at a conference off the Las Vegas Strip that featured a clown, a mind reader and a $31,208 reception.

Administrator Martha N. Johnson, in her resignation letter, acknowledged a “significant misstep” at the agency that manages real estate for the federal government. “Taxpayer dollars were squandered,” she wrote. At the start of her tenure in February 2010 she called ethics “a big issue for me.”

Public Buildings Service chief Robert A. Peck, a fixture in the Washington area real estate community on his second stint running the department, was forced out, along with Johnson’s top adviser, Stephen Leeds. Four GSA managers who organized the four-day conference in October 2010 have been placed on adminstrative leave, officials said.

The leadership collapse came hours before GSA Inspector General Brian D. Miller released a scathing report on the $823,000 training conference, held for 300 West Coast employees at the M Resort and Casino, an opulent hotel in Henderson, Nev., just south of Las Vegas. From $130,000 in travel expenses for six scouting trips to a $2,000 party in Peck’s loft suite, event planners violated federal limits on conference spending.

The episode is an embarrassment for the Obama administration at a time when the role and size of government have taken center stage in the presidential campaign. How much government should spend, and on what, will be at the heart of the election-year battles between Democrats and Republicans.

The White House, which has led a campaign against government waste, was alerted in March to the year-long investigation. It moved swiftly to get in front of the scandal. Chief of Staff Jacob J. Lew briefed President Obama before last week’s trip to South Korea.

Obama “was outraged by the excessive spending, questionable dealings with contractors, and disregard for taxpayer dollars,” Lew said in a statement to The Washington Post, calling for “all those responsible to be held fully accountable.”

But Capitol Hill lawmakers were quick to criticize the scandal as fresh evidence that the White House is tolerating wasteful spending.

Sen. Joseph I. Lieberman (I-Conn.) called the episode “a stupid and infuriating waste of taxpayer dollars.” House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) said it reflects the “waste that exists in a bloated federal government.”

Johnson will be replaced by Dan Tangherlini, the Treasury Department’s assistant secretary for management, a widely respected manager who was city administrator for the District and acting director of Metro.

Johnson, through a spokesman, declined to comment. Peck, reached while traveling in Ohio, also declined to comment.

The GSA, with 12,600 employees in 11 regional offices and the Washington headquarters, also handles much of the government’s procurement and holds a “Western Regions” conference every other year for employees assigned to West Coast offices. The focus is on training in job skills and “an exchange of ideas between ‘higher-ups,’ ’’ the inspector general said.

“As the agency Congress has entrusted with developing the rules followed by other federal agencies for conferences, GSA has a special responsibility to set an example, and that did not occur here,” Miller wrote. In an interview Monday, he credited Susan Brita, a deputy administrator, for tipping off his staff to the spending.

The agency “followed neither federal procurement laws nor its own policy on conference spending,” giving preference to favored contractors, for example, he wrote.

After the conference, GSA employees created an internal Web site that featured photos and videos of the conference highlights. It was not taken down until last week.

Managers ignored several warnings from employees to tone things down, the inspector general said.

Among the “excessive, wasteful and in some cases impermissable” spending the inspector general documented: $5,600 for three semi-private catered in-room parties and $44 per person daily breakfasts; $75,000 for a “team-building” exercise — the goal was to build a bicycle; $146,000 on catered food and drinks; and $6,325 on commemorative coins in velvet boxes to reward all participants for their work on stimulus projects. The $31,208 “networking” reception featured a $19-per-person artisanal cheese display and $7,000 of sushi. At the conference’s closing-night dinner, employees received “yearbooks” with their pictures, at a cost of $8,130.

The GSA also failed to follow regulations on the use of contractors for the conference, promising, for example, the hotel an additional $41,480 in catering charges in exchange for the hotel lowering its lodging cost to honor the government’s limit on room prices.

The report also found “redundant and wasteful” practices that included hiring outside event planners when the agency already had an event planning staff.

GSA spokesman Greg Mecher said the agency “is appalled’’ by the inspector general’s findings and will consider disciplinary action against other employees if it is warranted. He pledged fast changes to accounting procedures and increased oversight over conference planners and contractors. Employees will be required to take mandatory training in conference planning. Travel budgets for several regional offices have been reduced, and future “Western Region” conferences have been canceled.

Obama tapped Johnson to lead GSA in June 2009 and, after waiting eight months for Senate confirmation, she took the oath of office by telephone from her Annapolis home in February 2010 during a blizzard. During a February 2010 interview, Johnson said she intended to run the agency as ethically as possible after years of scandal during the Bush administration.

Ethics “is a big issue for me,” she said at the time, adding that “it’s right and it’s good business” to be a “responsible steward of taxpayer dollars” because “they’re trusting you with their pocketbooks.”

She once served as an executive recruiter for the Ben and Jerry’s ice cream company and most recently was a senior vice president at the Computer Sciences Corp. She served stints at the GSA and the Commerce Department during the Clinton administration.